Olongapo SubicBay BatangGapo Newscenter

Tuesday, January 10, 2006

Clark exec nixes local taxes for investors

By Dante M. Fabian, Sun Star

CLARK ECOZONE -- Clark Development Corporation (CDC) president and chief executive officer Antonio R. Ng declared that the Municipality of Mabalacat has no authority to impose and collect any taxes from locators in the Clark Special Economic Zone (CSEZ).

Ng also bared plans of filing criminal and administrative charges against Mabalacat officials who will continue to pursue collection of business taxes and other regulatory fees from CSEZ locators.

Ng said this as he declined a request of Mabalacat officials to provide them with a list of locators "complete with relevant information."

Reacting to communications he received earlier, the CDC president informed Mabalacat municipal treasurer Angelito Pelayo that the Supreme Court (SC) ruling declaring as null and void Section 5 of Executive Order No. 80 signed by former President Fidel V. Ramos.

The Supreme Court voided the grant of said tax incentive in Section 12 of Republic Act (RA) 7227 saying that the privilege is exclusively granted to investors in the Subic Bay Special Economic and Freeport Zone.

Rejecting the collection of fees and taxes by the local government, Ng averred that the SC decision on which the local government hinged its plan "is not yet final and executory."

He clarified that the SC decision is the subject of a motion for reconsideration filed by the Clark Investors and Locators Association (Cila) and even the commissioners of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have set aside its implementation.

Ng issued this statement in a letter dated January 2 in response to a request by Mabalacat officials for CDC to provide them a list of all CSEZ locators with the intention of assessing local taxes on them.

Pelayo also asked CDC officials to assist in informing the Clark businessmen of the local government's intention.

Ng told Pelayo "the Supreme Court decision "you referring to is not yet final and executory as there is a pending Motion for reconsideration. Therefore, the Municipality of Mabalacat has no authority to impose much less collect any taxes or permit fees against locators within the CSEZ."

"In the interest of not causing undue concerns to our Clark Investors and Locators, please be informed that even the BIR and BOC Commissioners have enjoined their respective staff not to take any premature action pending finality of SC ruling," Ng disclosed.

"Should you wish to persist in your attempt to assess or collect against locators within the CSEZ, we shall have no choice but to file the necessary administrative and criminal cases against you," warned Pelayo.

Earlier, Mayor Marino "Boking" Morales called on over 350 foreign and local investors inside the Clark Special Economic Zone (CSEZ) to start paying business taxes and obtain permits from the local government this year.

Morales based his action on a decision issued last year by the Supreme Court declaring Section 5 of Executive Order No. 80 null and void, canceling all incentives and tax exemptions of locators in the Clark ecozone.

Instead of the normal rates of taxes and duties, Clark ecozone investors pay only 5 percent on their gross income earned (GIEs) as a form of tax incentive to lure more locators.

CSEZ locators are assessed one percent of their Gross Income Earned (GIE) for distribution to local governments around metro Clark namely Capas and Bamban towns in Tarlac province, Angeles City, Mabalacat, Porac and Magalang in Pampanga.

In his letter, Pelayo noted that locators in the Clark ecozone are now "within the legal boundaries of the municipality beginning January 1, 2006."

"Considering the foregoing, we would like to inform you that the Municipality of Mabalacat, pursuant to its mandate and powers as contained in the Local Government Code, shall commence collecting business taxes, inclusive of Mayor's Permits and Building Permits from locators inside the Clark ecozone," said Pelayo.

At least 90 percent of Clark ecozone fall in the territorial jurisdiction of Mabalacat town, now a first class municipality vying for cityhood status.

Morales did not say if he will collect back taxes from the Clark investors which will run into millions of pesos since Clark ecozone had opened shop in 1995. The government had converted the former US-run Clark Air Base into productive civilian use tapping its tourism, industrial and airport potentials.

Angeles City Mayor Carmelo Lazatin had recently stopped the construction of SM Clark and Morales was equally exerting his political will on Clark locators based on the decision of the Supreme Court.

CDC reported that between year 2000 and 2003, some P4.8 billion in wages had been paid by CSEZ investors. In 2004, some $895 million in exports had been posted while some $1 billion in exports is expected to be achieved for 2005.

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